Planning is a complex process. Therefore, it embraces a number of steps to be taken. In planning various facts are collected and analyzed and best out of all is chosen and adopted. It is not necessary that the procedure of planning which is valid for one organization may be valid for other organizations.
What are the 8 Main Procedures or Steps of Planning Process
- Awareness of Opportunities
- Setting Objectives or Goals
- Developing Planning Premises
- Determining Alternative Courses
- Evaluating Alternative Courses
- Selecting a Best Alternative
- Formulating Derivative Plans
- Budgeting the Plans
Because various factors that go into planning may differ from organization to organization. However, generally procedures of planning involve the following steps as shown in figure below, which can be made applicable to any organization with minor modifications.
(1) Awareness of Opportunities
Strictly, this is not the part of the planning process as i precedes the actual planning.
However, an opportunities in the environment is important to reveal the strength and weaknesses of the organization and understand the problems Setting realistic objectives depends upon this awareness.
It enables to utilize the opportunities and face challenges.
(2) Setting Objectives or Goals
The second step is to set objectives/goals for the whole organization as well as for each department. All keep the information about objectives to be achieved.
Object be specific and clear. They should specify the expected and indicate the end points of what is to be done and where the emphasis is placed.
They give direction for planning. Managers should also have opportunity to contribute their ideas for Man setting their own objectives and of the organization.
(3) Developing Planning Premises
Premises are planning assumptions about the environment in which the plan is to be carried out. Thus, it is a forecast of sales volume, production cost, product line, competition, availability of labor, wage structure, tax rates and policies, profitability, and political and social conditions.
There are number of sources to draw from when preparing forecasts for the organization. Thus planning premises are vital to the success of planning as they supply pertinent facts and information relating to future.
(4) Determining Alternative Courses
The fourth step is to search and identify the alternative courses of action. It suggests that a particular objective can be achieved through a number of ways and quite often an alternative that is not obvious proves to be the best.
However. all the alternatives cannot be considered for detail analysis. Hence, the planner must usually make a preliminary examination to discover the most relevant alternatives.
(5) Evaluating Alternative Courses
After identifying alternative courses the next step is to evaluate their strong and weak points with reference to cost, risk, profitability, capital requirement, etc.
However, there is no certainty about the outcome of the alternatives because they ate related with future and future is quite uncertain.
In most situations there are so many alternatives and courses and so many variables and limitations to be considered that makes evaluation work more complex.
It is why mathematical techniques have been developed.
(6) Selecting a Best Alternative
After evaluating the various alternatives, the most suitable alternative is selected keeping in mind the organizational goals/objectives.
Occasionally, an evaluation may disclose that two or more are advisable. This is the real point of decision making. In such circumstances other critical factors should be considered and select the one for execution.
(7) Formulating Derivative Plans
When a best alternative is selected a basic plan is formulated. After this various plans are derived for each department and segments of the organization to support the basic plan.
Departmental plans should not contradict with the basic plan.
(8) Budgeting the Plans
After plans are set, the final step is to prepare budgets for each derivative plan. The overall budgets of the organization represent the sum total of income and expenses. If done well budgets become an important standard against which planning progress can be measured.